- Tips for
College Students on Using Credit Cards Wisely
(ARA) - Once college students
reach the age of 18, they can get a credit card. Two-thirds of
college students have at least one credit card, and 55 percent
of students received their first card during their freshman year
of college, according to a study by the Institute for Higher
Education Policy and The Education Resources Institute. Of those
college students with credit cards, 20 percent have four or more.
Students can use credit to
their advantage if they use credit cards wisely. By building
a positive credit history, they can make large purchases, such
as a car or home. Credit is not an advantage, however, when individuals
use credit to stretch their income and add charges to their bill
every month. Before they know it, some students reach their credit
limits without a source of income to pay off their debt.
The key is not to avoid credit
but to learn to use it wisely. To help college students take
charge of their credit, the American Bankers Association (ABA)
Education Foundation is sponsoring "Be In Charge of Your
Credit," a financial literacy campaign.
The online program teaches
students how to use credit responsibly, determine the right card
for their needs, and explains common credit terms. Students can
test their knowledge by taking a credit quiz. The site also focuses
on safety issues such as protecting your credit and what to do
if you lose your credit card.
"The goal of this campaign
is to teach college students the credit rules of the road before
they get behind the wheel," says Lynda Glass, chairman,
ABA Education Foundation and senior vice president, retail banking,
Adams County National Bank. "It's necessary that college
students learn how to use credit cards wisely and safely. Establishing
credit is important because it allows you to rent an apartment,
finance a car, or purchase a home. If you abuse credit, dreams
of the future turn into a nightmare of a bad credit rating and
mounting debt."
Here are some credit do's and
don'ts from "In Charge":
Credit Do's
* Do shop around. If you get
a solicitation in the mail, on campus, on the Internet or at
the local bank, compare rates and fees. The credit card industry
is very competitive so interest rates, credit limits, grace periods,
annual fees, terms and conditions vary.
* Do read the fine print on
the credit application. The application is a contract, so read
it thoroughly before signing. Watch for terms such as "introductory
rate" and periods that expire.
* Do ask questions. You are
the customer and the bank is providing a service. If you don't
understand something, ask.
* Do be wary of anyone who
claims they can "fix" your credit. The only thing that
can fix a credit report is time and a positive payment history.
* Do promptly open and review
your bill every month. This helps you pay your bill on time and
protects you from identity theft and unauthorized charges.
* Do be careful with your credit
card. Keep it secure. Always have your bank's phone number available
in case your card is lost or stolen.
* Do view credit as an investment
in your future. By using credit wisely, you can build a good
credit history.
* Do order a copy of your credit
report annually. Your credit report is like an academic report
card -- it evaluates your performance as a credit customer. It
needs to be accurate so you can apply for other loans such as
a car or a condo.
Credit Card Don'ts
* Don't feel pressure to get
a credit card if you don't want one. A credit card may not be
right for you. Don't be afraid to say no to salespeople. It's
okay to walk away.
* Don't pay your bills late.
Late payments can hurt your credit rating.
* Don't spend more than you
can afford. A credit card is not magic money; it's a loan with
an obligation to repay. Realize the difference between needs
and wants. Do you really need that CD or pizza? If you charge
these items and only pay the minimum, you could be paying for
them months from now.
* Don't apply for more credit
cards if you already have balances on others.
* Don't ignore the signs of
credit trouble. If you pay only the minimum balance, pay late
or use cash advances to pay living expenses, you might be in
the credit "danger zone."
* Don't give out your credit
card number unless you've initiated the transaction. Be alert
to identity thieves and scam artists.
_______________________________________
The ABA Education Foundation
also provides tips on budgeting and savings. Visit www.aba.com and click on the Consumer
Connection link to access this information.
- Courtesy of ARA Content
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ARTICLE POSTED
FEBRUARY 18, 2003
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